The current epidemic of obesity and the metabolic syndrome has dramatically increased the frequency of fatty liver, which can cause fibrosis, cirrhosis, end-stage liver disease and hepatoma. Fatty liver (steatosis) affects approximately 30 percent of the people in the USA. SHP (small heterodimer partner) is a nuclear receptor that regulates several major aspects of the metabolic syndrome, including obesity, dyslipidemia and insulin sensitivity. The major objective of this study is to determine how SHP-deficiency prevents fatty liver in mice. The central hypothesis is that SHP regulates hepatic fatty acid uptake and oxidation (Aim #1) and hepatic lipoprotein catabolism (Aim #2) in a way that has a major influence on the development of fatty liver. The loss of SHP regulation is predicted to increase lipid oxidation, and decrease lipid uptake, which coordinately decreases fat accumulation in the liver. This hypothesis is based on the Preliminary Results, demonstrating that: a) SHP deficiency in SHP-/- mice decreases hepatic lipid accumulation and protects against high-cholesterol or high-fat diet induced steatosis; b) fatty liver in obese diabetic mice (OB/OB) is prevented by the absence of SHP (OB/SHP-/- mice); c) the PPAR? pathway is down-regulated, whereas the PPARa pathway is upregulated in SHP-null mice; and d) lipoprotein clearance and HDL cholesterol uptake is decreased by SHP-deficiency. Once the mechanisms of SHP regulated transcription of critical genes in these pathways are defined, it should be possible to target these processes with small molecules to improve or prevent fatty liver disease (long-term goal). The Specific Aims are to define: (1) mechanisms for SHP regulation of hepatic fatty acid uptake and oxidation; and, (2) mechanism for SHP regulation of lipoprotein catabolism. Identifying specific functions of SHP and the mechanisms preventing fatty liver in SHP deficient mice should provide mechanistic insight and novel approaches to treating or preventing fatty liver in patients.